Perm-anent Impact: What an ’80s Home Perm Can Teach Us About the Value of a Financial Advisor

By Faith Doyle, MBA, Financial Advisor at Webb Investment Services

Ladies, do you remember the 1980s? The decade of glitter, glitz, and Tab, of pop music, loud fashion, and,  perhaps most iconically, big hair? When it came to hair in the ‘80s, the bigger, the better, and many women lacking that vivacious volume chose to plump their locks with perms. Unless you were of the echelon of Robin Leach’s Lifestyles of the Rich and Famous, a salon perm was a costly and likely unfeasible luxury; such a style could set you back as much as $50, the equivalent of a new car payment at the time. That price tag led many women to reach for a home perm instead—which, 99 times out of 100, was a mistake as big as the hair they hoped to achieve. The intention was to look like Sarah Jessica Parker, but the result was a style that looked like you’d stuck your finger in a light socket. What was initially a decision intended to save money proved to be even more costly, leaving a dried, fried mess.

It’s a lesson we’ve all learned over the years and that is particularly applicable when it comes to your financial advisor: you get what you pay for.

As with cheap salons or home perms in the ‘80s, it’s possible to save money on your financial advisor or, even worse, try to DIY your portfolio. But the results are the same: Every now and then it works out, but most of the time it ends up being a hot, curly mess.

It’s true that a financial advisor will cost more than preparing your portfolio yourself, but those fees carry a lot of insight and expertise that provide benefits with a value that far outweighs the savings of DIY. From helping you make rational decisions with your money to a tailor-made retirement plan, from planning for a long life to preparing your legacy, like a good stylist, the value of an experienced financial planner is often worth the expense. Let’s take a deeper look at the return on investment of paying for financial advice and management.

One of a financial advisor’s most important roles is to help you make rational decisions in irrational markets, which is referred to as “behavioral finance.” For example, as seen in Figure 1 from JP Morgan, clients with $10,000 fully invested from Jan. 4, 1999 to Dec. 31, 2018 (a 20-year span) saw a 5.62% return by staying fully invested. If they had missed the 10 best days of that 20-year market, their return dropped to just 2.01%. Missing 20 days total out of 20 years, their return was negative at -0.33%. In fact, between 1999 and the end of 2018, 6 of the best 10 days occurred within 2 weeks of the 10 worst days, a huge case to stay invested. A financial advisors’ job is to help you stay invested; like a stylist when you first sit down in the chair, your financial advisor could quell your nerves and help you navigate opportunities in order to make a decision that’s right for you. A good advisor most likely won’t put you in a more aggressive stance than needed based on your goals, but they often will help you stay invested and advise against pulling cash at every market downturn, which could prove to be disastrous over time.

Like a stylist helping plan your #hairgoals, a financial advisor is equipped to help you determine your retirement projections and what is needed for your #retirementgoals. It is estimated that 29% of Americans 55 and older don’t have a retirement nest egg or traditional plan1; this is a national crisis, but one that can be alleviated on a personal level via a financial advisor.

A significant tool in saving for retirement is tax planning. An advisor has the unique expertise to help you determine where to save the money (which type of account), and the knowledge to identify which accounts to withdraw from and when based on your specific tax situation. By employing a thorough understanding of taxes and collaborating with your CPA, an advisor can develop a strategy that is well-suited to your situation.

Social Security is another important aspect of most retirement plans, but not all strategies in employing it are equal. An advisor can help you navigate your options and choose the strategy that fits your goals. Social Security and healthcare are the greatest issues facing retirees, so it’s important to seek the expertise of an advisor to ensure you choose the best plan for your needs.

In the ‘80s, when you chose a stylist over a home perm, you not only walked out with the kind of big hair Dolly Parton would be proud of, you also left with the tools and knowledge to keep your hair looking good for a long time—it was like the Estate Planning of hair. An important aspect of preserving your legacy is planning how your money will be allocated after you pass, which is the foundation of Estate Planning. The American Bar Association estimates that 55% of American’s die without a will or estate, which leaves the distribution of their assets to the state. Instead, choose a trusted financial advisor who will work with you and your attorney to ensure your Estate Plan makes sense for your situation and financial goals. A well-designed Estate Plan can include philanthropic strategies to help you plan for and fulfill your legacy, and a program for how assets are protected and strategically distributed to the next generation. An attorney friend once said, “The only thing worse than no estate plan is a poor estate plan.” Employing a team of experts will ensure you design an Estate Plan that achieves your final wishes.

A financial advisor helps you plan not only for after you’ve gone, but for the many years in the interim. We all hope for a long life, but the question we tend to avoid in this aspiration is, “Can I afford it?” If you didn’t plan for it—a process called Longevity Risk Management—the answer is dubious. The Social Security Administration estimates that 25% of 65-year-olds will live to be older than 90, and 10% of 65-year-olds will live to be over 95. It is estimated that the average spending in the last four years of living alone (not in Long Term Care) is roughly $108,000 per year2. It’s important to put a plan in place that accounts for the additional expenses of a long life, and an experienced financial planner can help with those projections and the pursuant plan.

When you counter in the gender divide, the odds are even more significant: There is an 85% probability that women who are 65 will live to 80 (that probability is only 65% for men)3. These statistics indicate that, as a woman, you will likely live alone in your later years, incurring those additional expenses on your own.

There are many things to consider and plan for in regards to your money and future, but a financial advisor can diffuse your concerns and narrow the list of overwhelming options into a series of strategies and plans catered to your goals and tailored to your unique needs. A financial advisor is an investment, but the assurance and guidance we provide is often invaluable.

You learned, perhaps the hard way, that your locks were best entrusted to the experienced hands of a stylist, so why would you leave something even more valuable—your living and your life—to the perils of do-it-yourself investing or an inexperienced financial planner? It’s always worthwhile to pay for a professional—just ask anyone who bought a box of Ogilvie in the 80s.


Figure 1.


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The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all

available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Faith Doyle and not necessarily those

of Raymond James.

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